Keeping Your Business Affairs Private
Privacy is frequently mentioned, often sought and rarely understood. This article will focus on protecting your identity when conducting business. Specifically, we will demonstrate how to structure your companies and finances to be wholly private. Your information won’t appear in any public database, nor will it be kept outside of your law firm’s and banker’s office. We will first define privacy, then provide a justification for those who pursue it, before finally demonstrating how to achieve it.
Our working definition for privacy will be, “the state of being free from public attention”. We chose this definition because it specifically mentions public attention. The intent of this article is to demonstrate how one can shield their affairs from publicity, not from the government. Potential clients often read online about offshore trusts or anonymous ownership and mistake it for an excuse to do anything – completely free from scrutiny.
Taking such a tact will not work for long. The government has far too many resources and living life looking over your shoulder is no way to live. The strategies herein are designed to protect you from creditors and prying eyes, not the “long arm of the law”.
Now, why should one want to avoid publicity? The answer we commonly give is this: You have nothing to gain by publicly displaying your wealth to neighbors, family, acquaintances, or creditors. During estate planning, we find those who inherit wealth are suddenly contacted by third, or fourth, cousins and similar fortune hunters.
Personal injury attorneys will also testify that those with assets are the targets of lawsuits, not those who have no assets. Have you heard about a welfare recipient being sued for millions? Probably not.
Protecting your identity and assets are important, but how do you go about it? There are several methods. The complexity of your financial situation will dictate which methods you use and how. These methods include forming anonymous LLCs, using nominee officers for corporations, and potentially forming a revocable trust.
Four states allow for the anonymous ownership of Limited Liability Companies. They are Wyoming, Delaware, Nevada and New Mexico. Only the company which organizes the LLC knows the true beneficial owners. You needn’t operate in those states to benefit. You may:
- Register said LLC to operate as a foreign LLC in your state.
- Designate said LLC as member/manager for a second LLC in your state.
You may find additional information about protecting your identity with a limited liability corporation here.
The above states require traditional c-corporations to disclose an officer for the public record. They also allow for the use of nominee officers, a.k.a. “officers for a day”. These individuals function solely as the public face of your company. When a search is done their name appears rather than yours.
Nominee officers can also be used to sign important documents such as leases, insurance contracts and anything else for public consumption. The nominee has full authority to act on your company’s behalf, but only as you designate. This provides the best of both worlds. The ability to have someone act on your behalf, and maintain your secrecy, without losing control of your affairs. You can learn more about corporate privacy here.
With both an LLC and the nominee officer service we advise you use an attorney. This is so your relationship is covered by attorney-client privilege. Other providers are unlikely to knowingly or willfully divulge your information, but it never hurts to have an extra layer of protection.
Protecting your identity can also be done via a revocable living trust. It exists as a separate entity and can shield your identity. Give the trust a generic name. It is listed as the owner of all assets, but the trust’s beneficiaries are unknown.
A revocable trust is considered a pass-through entity for tax and asset protection purposes. Attorney’s often provide them for less than one thousand dollars. They are thus relatively inexpensive and make little hassle due to their pass-through status.
We hope to have sufficiently informed you about various manners in which you can shield your identity while conducting business. The goal is not absolute anonymity. That is unrealistic, especially in today’s digital age. What is more realistic, and thus attainable, is shielding your affairs from public scrutiny. Broadcast what you have and make yourself a target or keep your head low and keep your life going as it is.
We think it’s an easy choice. If you have any additional suggestions or critiques, then please reach out and let us know. We are always happen to learn and adapt.